Monday, May 04, 2009

4GM: The Plausible Premise and the iTunes Monopoly

A while ago Dean sent me this Variety article. The upshot -- the networks are moving to video, but the ad revenues aren't there. Here, for me, are the nut graphs:

So why are the networks investing in sites like Hulu and allowing widespread online distribution of their costly exclusive programs? Because they saw what happened to record labels, which avoided the Internet for years when they couldn't figure out how to protect their old business model. In the process, they lost millions of consumers to piracy and other digital-friendly alternatives. Thanks to faster connection speeds and cheaper storage, accessing video is about as easy now as music was a nearly decade ago when Napster began making headlines.

(SNIP)

Which leaves Hollywood in a Catch-22: If it doesn't follow increasingly wired consumers online, it could lose future generations to piracy, amateur YouTube clips and videogames. But if too many people switch to services like Hulu too fast, the business model of television could collapse.

First off, the phrase "piracy, amateur YouTube clips and videogames" is in the wrong order. Videogames come first in that list of threats.

Where was I -- oh, well, yes. The business model of television will collapse. I'm not bloody HAPPY about it. The business model of television pays me quite nicely, thank you very much. However ...

... right, detour, stay with me. Our favorite new-warfare guy Jon Robb writes about the "plausible premise" in new open-source insurgencies. I'm not going to get into his new warfare theory, but basically what you really need is a plausible premise. i.e. "You can kill US soldiers with IEDs." and then the new Interconnected Marketplace Of Shitty Evil Ideas will solve the problem for anyone looking to kill US soldiers with IEDs.

Or, more succinctly, in order to get the marketplace off its ass to solve the impossible, you have to just pull off the highly improbable and make sure everybody knows about it. Show it can be done, show how you did it, and watch the "marketplace" attack because you've made the "premise" "plausible".

Now what's kind of interesting here is that everybody in TV looks at the music industry collapse as the Bad Story and iTunes as the plausible premise for digital entertainment distribution. iTunes makes money. QED, there is money to be made in digital distribution.

But drawing this conclusion ignores one of the fundamental facts about iTunes -- it is a de facto monopoly. As Clay Shirky writes quite shinily here, a series of lawsuits and circumstances cut off pretty much all other music distribution channels online. Tying the system in to great hardware was the clincher, of course, accelerating the process. But end of day, if you're buying a song quickly, easily and legally in the US, you're buying it from iTunes.

The TV humans are missing the point of this plausible premise -- you can make money off digital distribution as long as you have a monopoly. It's a little shocking that they're missing this, as the massive financial success of the entire television industry up until recently was based on them having a monopoly. A taxpayer-funded monopoly, no less.

Now, let's see how many ways I can watch HEROES right now, off the top of my head:

1.) On NBC when broadcast - ad supported

2.) On NBC.com - ad supported

3.) On HULU - ad supported.

4.) XBOX LIVE - direct purchase

5.) iTunes - direct purchase

6.) Amazon Video on Demand - direct purchase

7.) Netflix - streaming, subscription ... hell, I have no idea what this revenue model is. Oh, and that Netflix is now available on cable boxes and game consoles.

(You'll note that these revenue streams all pay different factions in different percentages.)

This, my friends, is not a monopoly. If you want to continue to do an ad-supported model ("the business model of television"), then every streaming version -- and broadcast is theoretically a really dumb streaming version that's riding on the remnants of the old monopoly -- takes viewers away from every other streaming version. In an extra special bit of stupid, NBC Universal is actually competing with itself by putting streaming episodes on both NBC.com and Hulu. Now I'm sure there are cross-platform advertising bundles in play, but it's still a dilution of the brand.

Ironically, CBS's utter refusal to stream their shows, generally seen in the industry as a failing, is the smart play. You want a CBS show, you either watch/tivo it -- where the ad pricing from the old monopoly still creates at least a framework for monetization -- or you buy it once the advertising bloom is off the rose, and the money filters back into the Viacomm coffers. Or you pirate it. And we have yet to see a single reliable statistic on revenue loss due to piracy.

So what's going to happen?

No idea*. But in the short run the smartest thing for all the studios who already have programming on Hulu is to shut down all video streaming on their network home pages. Hulu got there first and fastest. If you're not on Hulu, get on it, or shut down streaming on your own site to take advantage of what's left of the old model. If you must have broadcast and streaming exist simultaneously, then force the streaming monopoly.

Apple's advantage in iTunes was that they weren't a music company. They could fuck another industry with a clear conscience in order to establish their monopoly. (This, btw, is why Apple TV sucks. They tried to play too nice with the studios) What's tricky is that there's going to be a lot of factional infighting in these companies as we move to the new model, because:

Hulu is owned by the studios who own the networks that Hulu is going to kill.

Ironically, whoever comes up with the Magic Box that moves streaming internet to the TV in a grandma-friendly way will win. This means that if the studios were smart, they'd be hammering at that tech, pouring money into it like mad so they own it, rather than fighting it. Of course, they're content companies, not tech companies, so that's probably not a priority.

And in the end, Netflix will win. But that's another post.

* Well, actually, I think download's going to die or be subsumed into the equivalent of a cable premium fee for "access" to the material. But that's more a gut instinct than an arguable position.

80 comments:

Anonymous
said...

The future is going to look a lot like Netflix through Xbox Live. Except for stuff I literally can't wait through the Netflix availability lag for (30 Rock, Lost, that's all), I watch everything through the Box now. I'm a Mac/Ubuntu guy who sent actual snail-mail letters to the FTC and DOJ denouncing M$ during the antitrust years and now I spend most of my free time using their service and pay handsomely (well, ~$15/mo) for the privilege. The waiting room in Gears 2 is like a conference call with a bunch of your friends where the sound is great and you don't use up your minutes. Once they expand the "View Instant" catalog and let you browse through the XBox client instead of using your now antiquated keyboard-computer, they will secure their grasp on the future. I guess that Bill Gates cat wasn't as dumb as everybody thought.

The studios' only defense is holding back on the latest content. The delay on blockbusters, award-winners, and the newest DVD seasons is the only flaw in Netflix-XBox Live. And while it's the only card they've got, it's not a trump card. There's too much back catalog of high quality. I have 150 movies in my View Instantly queue. No new movie or TV season has a high enough entertainment margin over those movies that I will seek out an alternate method at an additional cost. I'll just wait.

I kinda like the idea of free, ad supported streaming that we could record from our computers in a Tivo-like manner so that we can view them later w/o commercials.

I mean, many of us watch TV now just normally putting up with commercials. So it's not such a change to do the same thing from our computers. In fact, when I finally got around to watching Leverage, 4 episodes had aired and I found them online - not from Hulu - then watched all 4 in a row.

The episodes available on TNT had commercials, but they somehow seemed less invasive than the ones on TV. Were there fewer? Shorter?

In any case, it makes me wonder about something that I'd love see data on. For some reason, people watching online seem to strike me as bigger Fans (as opposed to fans) of the programs they watch and are more likely to buy the DVDs. Personally, I don't even watch television any more...except for Leverage. But I plan to buy the DVD and rip it to my computer so I can watch it whenever I feel like.

And that's kind of how I see the future developing. A combination of On Demand programming and people having collections of stuff on their hard drives.

Um, I don't have anything Apple. I buy my music from Walmart.com. I know, I know, they're evil bastards. But I don't buy a lot of music, so I'm out of the loop for the best place to buy non-Apple music from.

I know iTunes has market share through the roof, but is it still a monopoly if you can actually get some of the same stuff elsewhere?

I won't argue with "defacto monopoly" but I will argue with "But end of day, if you're buying a song quickly, easily and legally in the US, you're buying it from iTunes." I've never ever paid money into iTunes but about 3 hours ago I bought Ornette Coleman's SHAPE OF JAZZ TO COME - the whole album - from Amazon MP3 for $0.99. It was quick, easy, legal and very cheap. I buy from Amazon because they are DRM free and higher quality than iTunes. Now if only Amazon were so enlightened about their Kindles and DRM.

What I do hate is the way iTunes has become such a central monolith in the center of podcasting, a medium with no natural scarcity and chokepoint until iTunes strapped one on after-market. Even though I'm a devoted Apple customer and shareholder, I don't like the way they are choking out too much of the ecosystem. That's why I support their competitors on the music store.

I had hopes for the download market, but you're right—Apple did play nice, and they're just plain charging too much money. The downloads should not be a 50% premium over the higher-quality Blu-rays, and with no extras.

That said, I'd rather see the paid download market fix itself than it die entirely; I like being able to use the free ad-supported streams for shows not from NBC Universal (who only allows streams to go up 8 days after airing, preventing you from ever catching up with the aired episodes). I'd even pay a buck for a 720p episode (what the iTMS charges $3 for now). But I don't plan on investing $50/month in digital cable just to be able to catch up on shows that I can still find online under the black flag.

The episodes available on TNT had commercials, but they somehow seemed less invasive than the ones on TV. Were there fewer? Shorter?I don't know about TNT, but in my experience with other streaming sites (NBC.com, Hulu, Fox.com, SciFi.com) it's the same number of commercials but much shorter (usually 0:30 each, instead of 3:00).

Leaving aside any discussion of the show's relative merits, isn't this what's killing DOLLHOUSE? All the fans want to watch it on Hulu, but watching it on Hulu doesn't make the network nearly as much money as watching it live (i.e. in an incredibly inconvenient and aggravating way that nobody likes) does.

I have a Macbook that connects to the HDTV in the living room via HDMI. It runs both Plex and Boxee, as well as Apple's own FrontRow.

Between them I can access a wide variety of streaming media such as Hulu and Netflix, plus many others. And I can stream local content over the wireless network off the big server in my home office.

It's pretty much a future proof setup since if it can be watched via a computer, I can put it on my TV with ease, legal or not.

It currently gives me what I want, which is ala carte television. I don't have a cable bill, instead I have business-class broadband with no caps. I can pretty much watch what I want, when I want. Why would I settle for anything less?

Leaving aside any discussion of the show's relative merits, isn't this what's killing DOLLHOUSE?Only if people not watching live have a Neilsen box. For those of us without one, though, online viewing is the only way to get counted.

I don't think Hulu is killing Dollhouse at all. It's becoming clear that Hulu and DVR are the only way that studios can get an accurate idea of how large an audience a show actually has. Fuck! they might as well simply leave friday and saturday night to the low-cost to produce reality shows and HAVE DONE!

Frankly, I still torrent, but with the advent of Hulu, i only have to do so with content that is not available to me otherwise. (Oh please let HBO make a deal with Hulu for True Blood.) Hulu is a godsend, especially for people like myself who work third shift.

I suspect that the only impediment that it suffers is that some enterprising cable company hasn't figured out how to offer Hulu back to cable viewers in, as Rogers puts it, a Grandma-friendly interface.

I've seen too many TV shows that i love die because the Nielson's killed them. If nothing else lets kill THAT business model.

Its interesting that the attempts to make money from the revenues are still thinking in the closed box concepts of 'find services to provide the content to the customers, and let them dictate what needs to be charged' which is what places like iTunes is like. But its obvious that unless your a monolithic juggernaut with the power already there trying to provide content, your facing an uphill battle.

But when it comes to piracy there was an interesting case when it came to your own show Leverage. One episode was screwy... the broadcast was regular style to upscaled HD or some such, so the image quality was terrible, and the main pirate groups didn't release the copy of the show that week because they didn't want the bad reputation of putting out a shitty product even if it wasn't actually their fault. Some amateur put it up like almost a week later explaining why it wasn't put out by the main pirate groups that week and anyone who wants to pirate that episode in its proper format has to wait for the DVD rips to show up.

If people are so concerned about piracy, using that example as a indicator, it might be better to 'air' shitty image quality episodes for public consumption and let the online distribution channels add something like watermarking technology to the streams so 'good quality' stream rips can be tracked to people. And the poor airings well... who cares about the pirating of that! (not just a plausible premise, but a valid interpretation via something seen 'in the wild' so to speak)

I'm not saying this is a good idea, but given the example of that one episode being aired funky and how the pirate groups reacted, it might show how things might work themselves out in the future.

I'm with Dave; I don't buy from iTunes if I can help it. I buy from Amazon, or I buy from CDBaby. (Of course, I'm in the odd-ish position of mostly buying indie music. It's literally been *years* since I bought an actual, physical CD from anyone other than the hand of the artist, over a table at the back of the bar/tent/whatever.)

Great article. I think iTunes has rewrote the books, but they don't hold all the cards. The larger player will be international ones that can bridge what we watch here in the States with what's on tap across the ponds.

I think iTunes has rewrote the books, but they don't hold all the cards. The larger player will be international ones that can bridge what we watch here in the States with what's on tap across the ponds.iTunes is the international one at the moment. While they don't sell cross-country content, they at least sell videos in other countries, which is a start. Compare to Amazon or Netflix, which are US-only (or possibly North America-only, apologies Canada if that's the case).

I personally have no problem watching TV on TV. I'm one of the few who actually like commercials. Although I will say TNT's commercializing of their own show is starting to get annoying. I see a commercial for Saving Grace and The Closer EVERYWHERE! I don't want to watch them because they're commercialized too much.

I think what's really killing Dollhouse is that they programmed it for Friday night. Rarely is a Friday night slot successful. Friday night used to mean death of a show, but with Hulu people are still watching it.

A lot of people in the 18-24 age group don't have a TV and they don't watch TV at night. They watch Hulu in between classes the next day or in the middle of the afternoon. If some stations (ABC) don't move over to Hulu then they're going to have trouble promoting newer shows. Which is sad because their lineup seems to be getting better with Castle and The Unusuals.

I use itunes constantly. I don't buy CDs because it's not eco-friendly, but mostly it's a space waster. The only tv shows I buy on itunes are the ones that I can't find online. I don't do the pirating thing.

The only reason I'm not watching Castle right now is that it's not available through Hulu. ABC has it streaming from their own website, but their software sucks (as do basically all of the network website players).

I recall an advertising executive that said he wasted half of the money he spent on advertising, but he didn't know which half that was. I really think that harnessing the power of the internet to better target advertisements is going to be a big part of the revolution. It has the potential to improve ad revenues, and once the advertisers see that it works better than the old system, they'll be putting the pressure on holdout content providers.

And one last wrinkle: Not only is Hulu owned by the networks it's trying to kill, but it's also mostly being piped into our homes by the cable TV providers it's trying to kill. Weird(er) things are going to start happening to our cable internet bills as cable TV service fades out.

What's killing Dollhouse is that it's not generating the sort of numbers Big Houses (more accurately Fox) think they need. They are still stuck in a 'limited field' view.

That is, the only choices in any given hour are those RIGHT THEN, and the broadcasting company has to get maximum benefit from that narrow slice. Whedon shows have always had hard-core fans, but they don't form a significant slice of all viewers. They are in many ways the perfect example of the long tail.

The Big House Network looks at total share per prime hour and sets a threshhold that must be exceeded. A show that doesn't cross that threshhold will be replaced because there are a LOT of things that could be put in the slot, and sooner or later one will 'click' with enough audience to make the desired amount of money.

Since the topic of Nielsen's has come up, did y'all hear Sunbeam Television is suing them? Several articles online about this, here's the TV By The Numbers mention: http://tvbythenumbers.com/2009/04/30/nielsen-sued-for-unlawful-conduct-by-sunbeam/17802

Having canceled Firefly and watched it make money on DVD sales and a movie they are, I hear, less likely to kill a show if they can see a profitable after-sale.While that sounds great on paper, and even works as it's both Fox the network and Fox the production company, I find that hard to reconcile with their unwillingness to pony up for the fourteenth episode (to make 13 "full" ones on the set, as roughly half of the unaired pilot made its way into other episodes).

And I hate to be the bearer of bad news, but what's killing Dollhouse is that, really, it's not very good. IMHOIt wasn't at the start, but—IMHO—it's steadily improved over the course of the season. :)

I wonder if "appointment television" is completely a thing of the past? I still watch TV, but only as a social event (Castle on Mondays, Supernatural on Thursdays). I watch Dollhouse on Hulu and videotape Leverage, old-fashioned girl that I am. Now that Harper's Island has moved to Saturdays, I'll have to watch that on-line as well. And I buy DVD sets of everything. iTunes I save for getting individual back episodes of old TV episodes.

I'm sure that the high-end side of The Future will be one shiny big multi-level platform, but in practical terms I think a lot of people might make do with a hodge-podge of technologies like I do. I'm just sayin'.

While I see your point as to how this affects the big guys and their content factories, the whole shift opens opportunities for smaller, more efficient operations to make money from a variety of sources.

--Streaming with ads from a variety of sources. --Downloads/torrents with extra content (also with ads).--DVDs with even more content.--merchandise

While these models don't support multi-national conglomerates (except when the inevitable transfer of assets to Hulu occurs) they do support MORE of those smaller companies each of whom creates content which satisfies a specific niche in the market.

I received an email today telling me I can "buy" a VOD service / server with unlimited content uploads for $10K. Now imagine 4-5 filmmakers who make similar niche films getting together and selling subscriptions to the site along with merchandise, DVDs, other content.

What was it you said awhile back? "Nobody gets rich, but everybody gets paid?"

I hope the future for television/movies is identical to the present for videogames (for me). Steam is fantabulous, and I use it almost exclusively for game content. Impulse looks good, too.

I'd be more than happy if studios followed their lead. I could keep There Will Be Blood and Days of Heaven ready for download on any system I want, updating to include extras as they're produced. Think what Down-Loadable Content would do for the studios. Of course, mediocre to shitty product would just sit, unloved, as who wants to permanently possess the 2nd season of Heroes, even if your master is sitting on a central server, not wasting space on your 5 Terabyte hard drive?

But, Chinatown? I'd buy that for $20, if my copy would get upgraded in sound and picture quality as the technology improves. Of course, this might have a downside, think about mishandled "director's cuts" or the destruction of The French ConnectionThat's what I want. That's what I think. I am not embarrassed.

After having witnessed the downfall of the music industry over here (7 years at a major label) and then switching to marketing DVDs for US, UK and German studios, to see them making the exact same mistakes a few years later I hope there will be more Dr. Horrible-esque adventures that will enable show creators and producers to distribute their own shows themselves in the future.They would still need some kind of marketing and PR co-ops though to make an impact. I know I would pay to be legally able to see the shows I'm interested in - and I'd be game to help out with the PR for Europe ;-P

[i]"The "Red Green Show" worked that way when he couldn't get a contract. He bought a 30m 7pm slot on Global in Ontario."[/i]

The problem with that is that the distribution network, in Canada at least, has consolidated and now the peripherals (A Channel/CH), are quietly being purged by their masters once they can't find buyers for the assets. Even Global itself is at this point one debt collector away from being a CTV/Rogers/Shaw network. Slowly but surely, the places with time to sell in slots where the vast majority of people actually watch TV are fading away.

So - I work in games and you're right about the threat of games. I advocate borrowing the TV format - pacing, "season lengths" etc. - for games because it's a model that the audience understands. I mean - who sits through a 10 hour movie?

But here's the thing that no one will tell you. Games are broken. We're paying millions in development, millions in advertising for single weekend releases.

We think we're the movie industry with no idea how the industry works beyond release. It's a mess, and it's not going to get any prettier any time soon.

Coming back to TV, the thing that we all, potentially, miss when we talk about how we'd pay for TV on demand is

(a) a lot of people don't, and(b) we won't pay in advance.

So - how do we make a show like Leverage on the hope that it has an audience? An episode at a time? Smaller webisodes?

As Cunningham says, the "model" opens up opportunities for smaller, leaner operations - but with what budget?

The underlying point is good, though. It will not be the channels that will have control, rather the production companies. Maybe we will see a change from producer and distributer - to aggregator.

Or maybe TNT can start an experimental, buy in per season "club" that allows fans to buy episodes from them as they are broadcast, and then gets a region free DVD at the end of the season - much like bands sell Download versions of albums, and then follow up with a boxed product - In Rainbows, the DVD from both Arcade Fire and Sigur Ros, most of NiN's products.

Ingrid - I have appointment TV - except it's at times that I choose and not the network.

Does anyone know Dr Horrible numbers? Are they comparable to, say, broadcast? Would it have seen a season through?

And, I know it's not the place but, Andrew, it _is_ getting better now - but the 6 episodes of dross that started the season means that I have no investment in the characters - especially as they change from week to week. And as mysteries go, this is pretty dull - I've been spoiled by Lost and Fringe.

Finally, thank you for bringing this up here. I miss good dramatic TV, I lost Jericho, Day Break, Pushing Daisies. I didn't get the chance to see Pretty Handsome. If there is a model that allows fan supported drama in some format or other, and if program makers or production houses are thinking about it, that's a great thing.

"As Cunningham says, the "model" opens up opportunities for smaller, leaner operations - but with what budget?"Does it matter?

I mean look at what crossed my desk today:

http://www.mercuryseries.com/index.htm

I don't think about budget when I see that - I see that it's a lot of fun and I want to see more. Besides, with the cost of actual production coming down (cost of cameras, equipment, post-production), and the networking capabilities of the web you can collaborate with people all over the world and achieve a high level of craft for little to no money.

Exactly what Rogers was alluding to in his post. I think the "plausible premise" has already happened (no, not Dr. Horrible) with AskaNinja.com. They've made money and elevated their career status by using the same tools available to everyone else. They were just "different." (read: actually funny).

As long as we continue to have folks upping the bar AND sharing the methods of said "upping" then studios will and should be afraid. There won't be one giant behemoth that will come and crush Tee Vee, but there will be thousands upon thousands of new media soldier ants ripping away at its carcass. Each one getting his and scurrying back to the mound to feast.

Dood, the game is over. Right now you can go to certain sites, search for any show currently on the air, and download it within half an hour, commercial free. They are put up within a few hours after broadcast, and are generally good quality. Don't believe me. Go to mininova.org and do a search. You'll turn white.

If the game were over that easily, Hulu and the network streaming sites would have never started, much less thrived this long. (Well, I'm not sure "thrived" is the word, but they're certainly not withering on the vine.

There will always be pirates of some sort. You can never make them go away; the best you can hope for is to convert them to legitimate users. Really, it's them that Hulu and their ilk most need to target, not Granny.

and here comes the point re "legitimate" sites like hulu versus the piratebay or mininova:

piratebay and mininova actually give me what I want without me jumping through flaming hoops. Whereas hulu (and all other comparable services) actually chase me away with flaming torches, even though I could be a paying customer.

Why is that so?

a) I don't live in the US, so apparently in this Brave New World I'm supposed to go fuck myself as far as actually receiving content is concernedb) these great new streaming services are streaming services. Fuck that. I want to own. Always have, always will. Storage costs next to nothing nowadays, so for me as a customer, there's no upside at all, none, to not having the content under my own control. Downside one: If I want to watch it again, it might have disappeared for some reason. Downside two: In all cases I have seen so far, the browser-based players, if they work under Linux at all, take up a much larger chunk of system resources whilst running than the regular video-players that are available. In a lot of cases (such as with my nice, ultra-portable low-power laptop), this is the difference between "stuttering non-watchable slideshow" and "nice watching experience". Downside three: I'm actually quite often in a situation where I want to watch something and have no network-connectivity available right at that moment, but some time before, with the possibility to plan ahead. So with downloadable content, I can just download and watch later. With streaming, I'm fucked.

So, seriously, fuck streaming.

Or as some writer -- forgot who it was -- said quite some time ago: Piracy, the better choice.

I swear - I haven't enjoyed myself as much in a debate as I have this one.

"Fuck streaming." I am with you on that one. IF I am paying, I want to own.

Except.

I didn't want to own when I watched TV before this. I mean, sure, I could have bought the collections of things like Farscape but it seemed, well, silly somehow. Why would I do that? I'm not going to watch it twice - that's a repeat, and I hate those....or...something.

But now that I can own, I want to own. I'm rewatching Lost season one and seeing, for the first time, Dead Like Me.

I digress.

Ownership through piracy is my only option at the moment because I, like Michael, "don't live in the US, so apparently in this Brave New World I'm supposed to go fuck myself as far as actually receiving content is concerned"

But that only works once shows are being made. As Pushing Daisies has been canceled, no amount of access to mininova or the pirate bay is going to bring me new shows.

I agree that The Mercury Men looks fun but does that mean we're looking to move to an online/gifting economy for web-shows?

And will that generate enough revenue upfront to pay a "famous" cast?

I like my Guild as much as the next man, but am I going to get... a CSI or an X-Files from this format?

"Fuck streaming." I am with you on that one. IF I am paying, I want to own.

If you're paying—or at least, if you're paying for that specific show, as opposed to subscribing to Netflix and getting access to everything they have—you do own it. Streams are currently reserved for cases where you don't pay with cash, but by watching ads (same as when it's broadcast). For the services like iTunes, Amazon, and Xbox live where you pony up cash, you get a download.

I like my Guild as much as the next man, but am I going to get... a CSI or an X-Files from this format?Patience, Harlequinade. Patience.

I think we can and we will get 'more' from our web content. Not only in terms of video, but all of the ancillary things the internet provides:

Books, comics, audio, games, etc...

Integrated into the storytelling of the whole shebang.

The internet is not JUST video and it can't, shouldn't be treated as "TeeVee on my computer." There are too many storytelling and merchandising options for that.

Re: "Stars" - I think we'll discover new stars on the web. Well, that's actually already happening and there's crossover occurring (Rosario Dawson in a web series, LonelyGirl on TV, etc..) Just like when TV first started in NY. Radio and Stage actors became commodities on the tube and made the transition to films and other media. There certainly wasn't a lot of money in TV back then either, but there was opportunity to ply the craft.

This has all happened before and it will happen again. The web just happens to do it exponentially faster.

Does anyone know Dr Horrible numbers? Are they comparable to, say, broadcast?The Dr Horrible numbers were good enough to DoS the site for the first 12 or so hours.

But, it's a bad test case for two reasons:

a) it had a built in audience from day 1b) said audience is made up of people predisposed to watching something on the web.

The trick starting from scratch is that you can't count on having that.

The other trick is that people largely don't seem to care about who made the show these days; they just like it or they don't and the hardcore groupies lie on the fringe. So, it's really not that easy to sell something based on authorship anymore.

Finally, one thing that should be really scary: as shows people like go away, the audience seems increasingly transitory and less likely to come back next week/month/year to see what replaces it when there's 15 other things to potentially occupy their time.

Back to the original post: Hulu isn't just in competition with the networks. It's in competition with it's distributor who wants to charge you $4.99 a shot for OnDemand, a $15 HDTV package, and $5 a month for your converter box (despite all recent TV's having a digital tuner). It's been hinted that this particular front in the war is part of why things like the recent episodes of BSG going from next day to a week behind hitting the site and official Hulu support being pulled from Boxee...

No. Oh, it'll probably beat most of the models you've listed, but it comes up against an irrefutable barrier.

In the eyes of the consumer, if they paid for it they own it. Paying for a temporary use of some things can be tolerated for many reasons, but it's not a 'fair deal'. Thus: piracy.

The other side of the problem does exist. How do you ensure that Jane, who wrote something millions of people enjoyed, is rewarded more than Joe who wrote something enjoyed by thousands? Fair question, but perfectly able to be carried too far. Specific case: more than one popular author has stated they hate libraries. They feel that each person who checks out a book from the library "owes" them royalties. Libraries are the original intellectual property pirates in their eyes.

Nonetheless the core principle remains. If I trade the fruit of my labor for the fruit of your labor, the latter is now MINE. The biggest exception is when you and I agree that the value of your fruit is significantly greater than the value of mine, and so to get any use I accept restrictions - thus we get rentals.

Absolutely, Cunningham. I believe that, with patience, we'll see this content.

But.

What's the transition?

Let's use Dollhouse, because we're kicking it about like the red-headed stepchild.

Suppose the viewer figures suck, but the digital views and DVD sales are very good. Good enough to turn a profit when you factor in the world distribution rights of the show.

Does fox say "You know, this show. It's aimed at people who are computer literate and tech savvy. We're not going to make so much money with this on a Friday slot, why should we bother? Why don't we spend the money, make it direct to web, work out some payment price and then make up the loss on the DVD sales" or will they say "Kill it."

IF they do the latter, how long will the transition take?

What will it take for the shift of platform or the recognition of other markets?

(which is where I'm heading with my arguments. I can see the promised land - ARGs, MMOs, Community based game, net TV, gift economy etc. etc. but how do we build the promised land)

DaveK - I actually meant - does anyone know the numbers of DVD sales of Dr Horrible. When it went pay, did anyone?

Coming back to Hulu - the enemy of Hulu/Network it the torrent. I had an advert come through my door for an ISP's TV on Demand. The ad said "How much do you pay for the TV you want?"

I thought - my broadband costs.

Finally, one thing that should be really scary: as shows people like go away, the audience seems increasingly transitory and less likely to come back next week/month/year to see what replaces it when there's 15 other things to potentially occupy their time.YES. As hour faith in the network is worn down, we watch less. I have friends who won't watch a show until the first season is over and they can get them all so they don't fall prey to the "This is a good show" touch-of-death.

And to close, Netflicks won't win. I'm on an equivalent in the UK. I catch up with old stuff on there but if I want to own it, I'll go somewhere else.

And until I see "Netflicks presents" they're just an after sale. And I can POD original content if I need to.

Let's use Dollhouse, because we're kicking it about like the red-headed stepchild.Having met Eliza be warned, she kicks back....

Suppose the viewer figures suck, but the digital views and DVD sales are very good. Good enough to turn a profit when you factor in the world distribution rights of the show.I think that what you're getting at is the crux of the matter, but let me be the first to say: Those factors you speak of are already in play before they go into production. They look at target demos, what's currently on the air in their and other networks, what they think they can make per territory and media on the show, what the domestic DVD numbers will be.

If the numbers don't equal enough of a profit they kill it. Unless they have a name attached they need to placate now and then (ahem - Bochco, Kelley). Notice I said "enough" of a profit. The way studio financing works with TV properties - they will wring every screaming cent out of it possible as soon as possible.

The transition has already happened before or have you forgotten that little multi-million, multi-season juggernaut that was BAYWATCH?

Couldn't do well on Network, but with some budget and production retooling, some presales to territories and a great market niche they went on to rake in gold.

(Literally, with rakes.)

(which is where I'm heading with my arguments. I can see the promised land - ARGs, MMOs, Community based game, net TV, gift economy etc. etc. but how do we build the promised land)One show at a time. We build it one show at a time.

Thing is, you still keep using the networks as the model (referring to Fox) thinking that the studios will be the vanguards of pushing this new medium forward.

Poppy-freakin-cock!

It is against the studios interest to move the internet forward (in the short term). The internet is only good to them for properties they already own and control and have made 500% profit on...that's why you're seeing Hulu out there with a large library of content.

Studios have always fought innovation. It goes against their seize and control everything model.

The key to innovation will be a production person who looks outside the system at another industry and adapts that to his needs. Hollywood has too skewed a system in place with too much waste they need to protect in order to justify their salaries and infrastructure.

The new thing may or may not come from someone outside the industry. It will not, however, kill the networks. Rather than get long-winded, allow me, please, to pull a little history.

Television was supposed to be the death of the movie companies. VCRs were going to do it too. In the 1930s the top five (net worth) movie studios were MGM, Twentieth Century Fox, Paramount, Warner Brothers, and RKO. Some of them are still alive.

I don't know how 4GM will turn out. I suspect that there will actually be a LOT of things that qualify as such (nature of 4th Gen theory is that there is no SINGLE way, but many ways; it's the flexibility as much as it is anything else that's critical) - sorry, let me try again. What will happen is that once a few of the 'new' methods turn out to be capable of making money, the groups with money to spend will coopt them. They are still thousand pound gorillas, and once you prove those weird round orange things taste good they're not going to ignore them because they're not bananas.

In the 1930s the top five (net worth) movie studios were MGM, Twentieth Century Fox, Paramount, Warner Brothers, and RKO. Some of them are still alive.

And the four from your list who survived diversified into television—all as producers, and three of them as their own networks. Television didn't kill them because they became television.

There's also the question of what TV can offer that 4GM can't in this age of media extenders. Theaters have 30-foot screens and surround sound (though even the latter is being replicated at home), and are trying such things as 3D; just by hooking a box up to my TV, I can experience 4GM the exact same as I can experience TV. There's nothing television can offer that 4GM can't replicate.

4GM won't kill the network companies. It will change television, but not kill it. I suspect there will still be appointment TV - this show coming on at that time every week, but I'm not certain of that.

I have no doubt the studios will transition as Andrew Timson says above.

But it's going to still be a situation where they are dragged out kicking and screaming and frothing at the mouth.

The studios looked down on television until they saw they could make a profit on it.

They looked down on VHS until they saw it wouldn't kill movies.

They looked down on Direct-2-Video until they saw it augmented their libraries of content.

They will be called 'studios' bu they WILL BE different entities than what you or I recognize today as 'studios.'

They will be competing with private investors, entrepreneurs, and other media, and I'm sure they will be competing with the government on the legal battlefield as well. Remember studios used to own all of their own theaters too, until someone figured out that monopoly was screwing the consumer.

Throw it all into the blender and call it the future. It spins, mashes, pulps and when the 'off' button is pushed and the future arrives - you have a smoothie that looks nothing like the component ingredients you started with...

4GM won't kill the network companies. It will change television, but not kill it. I suspect there will still be appointment TV - this show coming on at that time every week, but I'm not certain of that.

Television companies can't update their offerings to offer something that 4GM doesn't.

So while movie companies still exist, it's certainly not in their original form. If they couldn't survive when they could adapt to beat the competition of television, what chance does television have when it can't adapt?

Andrew Timson, ah, I see your (and Cunningham's) points. We have some confusion of terms, I think.

The movie studio of today is not the movie studio of 1935. In that respect, movie studios were killed by television. On the other hand, the companies adapted and for the most part continue to exist. In that respect television did not kill the movie studios.

I severely disagree with Cunningham's position that the studios will be unable to compete. I agree they'll (mostly) be dragged into the new methods as opposed to being the lead. I say mostly because there are some slices where they are playing with options. However, to believe they are going to be unable to compete ignores the fact they've got money and some institutional knowledge of what it takes to put together a video entertainment package. In the end, having enough money means they can get in late and still be strong.

Again, to some extent we're saying the same thing but with different slants. Many of the current powerhouses will still be powerhouses in the video entertainment business 20 years down the road. They'll be somewhat different just as they no longer look like what they were 20, 50, or 80 years ago. All things adapt or die. Adapting, however, is not death.

I'm with Cunningham. I agree that we will see a new future of entertainment, and I believe it will come from outside of the industry. I believe this with games - ARGs, hell, even Portal - are only here because they were made by people not tainted by "the way we do things."

But there is something I don't understand. And it's possible I don't understand it because I don't understand how TV works, but...is there any new and exciting, break out original drama on PBS?

The reason I ask is not to be a dick, but, well, two reasons. The first is I really don't know.

The second is that we have 2 markets. I hunt for pre-airs, read the premiere dates of new shows, set up my viewing schedule. (European) But my mum can't do that.

Hell, at least 90% of my friends don't even know what Hulu is. They don't know how to torrent, where to look for streaming sites etc.

For them, cable/satellite is the way they get their TV.

I know people who don't listen to podcasts and are unlikely to look for video podcasts.

This is why I keep talking about the studios.

There are many markets and we need to make sure that their transition is easy or we're just a niche market.

And while I don't think the studios will be broken by 4GM, I think that if entertainment is democratised, and if we produce good, stick drama and if we can get that to the audience, I think their power is going to be much diminished.

Time. Let me take this to books as it applies explicitly and it's the field I know much better.

I can find the current print/sales catalog of the several thousand publishers and buy from each explicitly - keeping track of invoices, sales terms, etc. Or I can go to Amazon. (Or in my field, Baker and Taylor or Ingram.) If I do the latter, I reduce my effort of searching by magnitudes, allowing me time to focus on other things I need to do.

Shift slightly. How many blogs do you read in a day? How much effort do you make to search for new blogs? How often are you surprised and delighted when one of those you mention points to yet another, and you wish you'd known back when it got started?

That's the role aggregators play. They consolidate and organize (ideally on several dimensions) so that you don't have to look at everything. Because you don't, you'll take time to get the things you want.

You or I as an individual prodco. can't get on ITunes right now without going through an aggregator:

-Partially due to the fact that it's the same amount of paperwork to license 20 films as it is to license 1.

-Partially due to the fact that individuals don't have a library of content to license and essentially no track record with Itunes.

Aggregators perform the function of the "palace guard" and only let citizens pass through the gates.

Going back to "studios" - they will lose some market segments to independents, just as they did with previous media. You make a valid point that deep pockets allow studios to catch up really fast...if it's not too late.

I maintain the soldier ant metaphor holds. Little bits of the market that the studios controlled will be lost to other entities from other industries (individuals, collectives, partnerships) who get into the media creation/distribution game.

I'm looking at individuals or companies that are able to connect directly with advertising agencies and large corporate entities who want to spend money (ads, product placement)in specific market segment media. Already we are seeing Joss Whedon and others take meetings with Microsoft. We see companies like Electric Farm crop up. Some will succeed. Some will fail.

But:

- The distribution methodology is there and it's nearly free. Traditionally that has been the biggest barrier to more media creation and monetization.

- Print advertising (newspapers and magazines) is going down while online ad spending (recession not withstanding) is on the rise and deepening in terms of type: web banners, sponsorships, product placement, social networking, etc..

- And we have these distribution nodes (notably Youtube) testing and integrating more and different ad revenue models for their content. Primarily because they have to use "all of the buffalo" in order to build a sustaining business model.

Things are changing, shifting out of the hands of the few into the hands of the many causing the costs to go down.

And remember: Historically, people have become rich when they delivered more, cheaper and faster. The web is all about that.(from Matt Ridley's column in Wired UK)http://tinyurl.com/q5hlj8

"Consumer deflation is the whole point of the industrial revolution and its aftermath. Whereas it took 18 man-hours to turn a pound of cotton into cloth in the 1760s, it took only 90 minutes to do the same a century later. A person therefore needed to work a twelfth as long to clothe himself. Most of the great industrial robber barons got rich by making things cheaper. Andrew Carnegie cut the price of a steel rail by 75 per cent in 30 years between 1870 and 1900; John D Rockefeller slashed the price of oil by 80 per cent over the same period. Henry Ford’s first Model T sold for $825. Four years later he’d cut the price to $575.

It’s still happening today. Wal-Mart, Aldi and Ryanair won their market shares by ruthlessly charging us viciously lower prices. And here lies a cause for optimism in the midst of this recession. Even though jobs are being lost, houses repossessed and firms bankrupted, the underlying deflation caused by innovation is still going on – indeed, on the web, it’s accelerating. All over the internet, people are dreaming up ways of making things available to you more cheaply, more conveniently, more copiously and more quickly. That is what will cause prosperity to return one day."This SIGNIFICANT CHANGE allows millions of peers with a simple wifi connection to individually or collectively work and distribute media in a competitive fashion. They may each only eat a few laves off the tree, but when taken together these small groups of ants from all over the world are going to clear out some of the jungle where the studio lion was king.

Another example of the entrepreneurial bootstrapping that is going on in media is the wonderful Nigerian film industry.

They produce and distribute their own content to their own audience in the cheapest way possible (DVD)creating a domestic film industry to the tune of $250M a year.

In Australia, there are TV shows that have only found success in Australia via DVD. They aren't broadcast or shown on cable.

Now studios like HBO are doing deals with Apple so we can only get the shows legally via iTunes download.

Why? Because our broadcast networks fucked shows around (changing timeslots, breaking up seasons, delaying broadcasts) and the fans just started importing the box sets than bothering with the tv channels. You could get the DVDs from Amazon BEFORE the show broadcast here.

But end of day, if you're buying a song quickly, easily and legally in the US, you're buying it from iTunes. ?? I have bought dozens of songs and albums online quickly, easily and legally...from Amazon. I have never used iTunes, and every time it tries to sneak onto my PC bundled with Quicktime, I kill it and throw away the corpse.

I don't think your example of a monopoly works here. Maybe a near duopoly...

"Vive la Révolution" indeed and this time the revolution will be global not a localized one. Maybe someone can explain to me why so many content creators despite the best of intentions seems to get bogged down in the regional rights swamp, for both games and shows the delayed release structures screams that some people dont get that the audience is global. When you´re writing and producing for the global audience telling part of your potential audience to wait some indefinite amount of time cannot be part of future distribution models.

iTunes isn't successful because it's a monopoly. It's successful because it was the first service to make it easy to purchase everything you want, whenever you want at the same price as a CD. By comparison Amazon is a relatively painful and ugly user experience.

TV is only pirated because watching ads is a waste of life and nobody likes setting TiVo. I purchase boxed sets because I'm too lazy to pirate. Paradoxically I will pirate a show if I really, really like it and can't wait for the DVD.

So like everyone else here I'd happily pay for online TV but it should be as easy as iTunes, same quality as the eventual DVD release at slightly lower cost and I should get it with no delay.